Foreign high-rollers flock back to Packer's Crown

Foreign high-rollers are returning in large volumes to gamble at Crown Resorts' flagship casino with the James Packer-backed company revealing a major lift in revenue from its international VIP program.

Crown, Australia's largest casino operator, revealed turnover from its VIP programs had risen nearly 55 per cent to more than $51 billion in the past financial year after being cut in half the year before.

Revenue from international VIP gamblers was up by 73 per cent at Crown's casino in Melbourne.Credit:Fairfax Media

At its casino in Melbourne's Southbank alone, VIP revenue rose 73 per cent to $591 million in the year to June 30, accounts show.

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"VIP program turnover had a very good recovery," said Crown executive chairman John Alexander.

Crown was rocked after its current and former staff were jailed and convicted in China over Crown's marketing activities aiming to attract wealthy high-rollers. The promotion of gambling is illegal on the Chinese mainland.

Crown's head of international VIP programs, Jason O'Connor has returned to work at the company following his release from jail in China, Crown confirmed on Thursday. The company would not say whether he was working in a marketing capacity, only that he was working on unspecified projects.

"He’s on our payroll," Crown chief financial officer Ken Barton said. "He’s working on some projects we’ve got — he’s been with the organisation a long time, he's got some very good history with the company, he'd done a lot of things before he was working in VIP."

Most of the other employees who were detained had since left the organisation, Mr Barton said.

Crown said it had overhauled its marketing presence in Asia in the past year, winding back its direct marketing efforts and was now more heavily relying on customers coming via third-party junket operators.

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Crown said its VIP program now had a "slightly different mix" of heavy-spending foreign customers.

"We’ve taken a conservative view, we’ve got a new model, we’ve got a sales force that is comfortable with the new model," Mr Barton said.

"Junkets ... have grown to be large and sophisticated business and they do have a business model that seems to work."

Mr Barton said it was "pleasing to see that our customers have come back to us in 2018 at a rate which is now starting to look more like what we saw pre the China detentions."

But he also cautioned that the large rise in VIP turnover may be skewed by the casino's unusually low win rate, saying: "If customers win and they’re playing with our money, they are more inclined to play for a bit longer.

If customers win and they’re playing with our money, they are more inclined to play for a bit longer.

Crown's Ken Barton

"So a low win rate could often be one of the causes of high growth in VIP program play turnover," Mr Barton said.

Overall revenue at Crown's two Australia casinos, in Melbourne and Perth, was up 10.6 per cent, accounts show. The group's normalised after-tax profit, which removes the volatility of high-roller win rates, rose 12 per cent to $385 million.

Following the results, Crown's share price climbed more than 6.5 per cent to $14.21. Crown will pay a 30 cent dividend on October 5.

Macquarie Wealth Management said Crown's results were "underpinned by the big recovery in VIP volumes", which helped offset the softer main-floor gaming results across its casinos in Melbourne and Perth. But analysts expected lower VIP growth in the 2019 financial year due to a "slowdown" in Macau.

Crown executive charirman John Alexander.Credit:Pat Scala

Crown, for the first time this year, agreed to long-running calls from gambling reform campaigners to be more transparent about its main-floor gambling revenue and outline the split between pokies and table games.

In response to questions from the Alliance for Gambling Reform at Crown's last annual general meeting, Mr Packer, who has since resigned from the board to deal with mental health problems, promised to consider making the disclosure.

"From my perspective, I think it’s a conversation that the board should have because we are living in a world of more and more transparency," he said at the time.

The alliance's Tim Costello welcomed the transparency, but said the figures showed Australia's "world-record" levels of gambling harm from pokies were even worse than expected.

Gamblers lost $450 million on Crown’s 2682 poker machines in the financial year, he said, accounting for 14 per cent of all pokies losses in Victoria.

"With $10 maximum bets versus $5 everywhere else, 24-hour trading and a highly sophisticated loyalty scheme, is it any wonder that Crown Melbourne's machines are 65 per cent more lucrative each year than the average across Victoria?" he said.